The Central government, as well as the Reserve Bank of India (RBI), have taken various measures over the last few years to address the issues related to credit discipline, responsible lending, improved governance, adoption of technology, and proper regulation of Co-operative banks.
As per the information shared by Minister of State (MoS) in the Ministry of Finance, Pankaj Chaudhary, in a written reply to a question in Lok Sabha, he said the credit discipline in the banking sector has been reinforced through the Insolvency and Bankruptcy Code (IBC), the RBI’s Central Repository of Information on Large Credits (CRILC) for monitoring corporate loans, and systematic checks on high-value accounts to detect wilful defaults and fraud.
A framework for early detection and time-bound resolution of stressed assets, along with automated Early Warning Systems, has reduced slippages into NPAs. Market-based mechanisms and the National Asset Reconstruction Company Limited (NARCL) have further enabled efficient transfer and recovery of stressed debt.
Governance reforms in public sector banks (PSBs) include arms-length selection of top management, appointment of Non-Executive Chairmen, widening the talent pool, and performance-based extensions for managing directors.
Enhanced Access & Service Excellence (EASE) reforms have improved governance, prudential lending, risk management, technology use, and HR practices. The amalgamation of PSBs has boosted economies of scale, financial capacity, and operational efficiency.
Technology adoption has expanded financial inclusion and real-time service delivery, with digital transactions surging through Jan-Dhan–Aadhaar–Mobile (JAM) linkage, interoperable Bank Mitras, UPI, and DBTs.
Regulatory measures such as the Banking Regulation (Amendment) Act, 2020, strengthened oversight of co-operative banks, while the Banking Laws (Amendment) Act, 2025, improved governance standards, depositor protection, audit quality, and streamlined processes for greater customer convenience, the MoS told.